Growing Pains
Sep 1, 2006 12:00 PM
General Growth Properties took a surprising dip in the second quarter, posting an $0.11 loss per share. Meanwhile, the REIT's quarterly funds from operations came in at $0.64 per share — 12 cents lower than analysts had predicted. It represented a 12.2 percent drop from the previous quarter.
At fault: the company had higher-than-expected interest expenses as a result of interest rate increases. General Growth is still carrying a heavy debt load as a result of its acquisition of the Rouse Co. in late 2004. Interest expenses for the firm rose to $1.15 per share for the quarter, up from $1.02 per share a year earlier. Most analysts expect the results to be a brief bump in the road for General Growth and that it will recover in the third quarter. However, REIT analysts at Wachovia downgraded the company as a result of its performance.
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